10 Key Takeaways on the Global Energy Transition
Singapore International Energy Week (SIEW) 2018 opened with the 36th ASEAN Ministers of Energy Meeting and closed with the Sembcorp-EMA Energy Challenge—a fitting start and end, as key policymakers discussed the proper regulatory frameworks for energy in the region, while university students found creative new ways to disrupt the energy system as we know it today. This year’s main theme – invest, innovate, integrate – was on full display the entire week. More importantly, what makes SIEW one of the most highly anticipated energy industry events across the world is the gathering of a diverse group of government, corporate, and technology developers across the entire energy spectrum, discussing the key ingredients necessary for the energy transition.
Lux Research’s Asia Energy team was in attendance all week, presenting and networking with some of the industry’s heavyweights. With all the knowledge shared, we narrowed down the 10 key takeaways that stood out the most to the team.
- Singapore’s position as the ASEAN chair in 2018 comes at a critical time for the region’s energy transition. As the leading financial and innovation hub, Singapore will play a critical role in spearheading technology adoption, enabling policy and investment frameworks, and representing the region on the global stage. Through its own global partnerships, we expect to see much of Singapore’s network trickling through the rest of the ASEAN nations soon.
- The “trilemma” of ensuring sustainability, affordability, and reliability shows how drastically different the priorities are in Asia compared to the West. This was a recurring soundbite throughout the week and is in stark contrast to the Western decarbonization, distributed, and digital tagline for the energy transition. While all important to Asia, the priority remains implementing grid-scale projects, both natural gas and renewables, at an affordable rate rather than encouraging the distributed generation projects often seen in the West.
- Oil and gas is here to stay, at least for the foreseeable future. No matter what forecast you look at, oil and gas demand continue to rise post-2050, largely driven by Asia. Despite the projected rise of electric vehicles, demand from the petrochemical industry continues to grow at an accelerated rate and is the primary reason many of the world’s largest integrated oil and gas companies are investing billions in the region.
Lux Research Analyst Harshit Sharma presenting at the Asian Downstream Summit on November 1, 2018 during Singapore International Energy Week 2018. (Photo by Lux Research)
- Going digital remains on every oil and gas executive’s mind, and the appetite remains strong for both technology and management tools. As the oil and gas industry’s digital transformation is rapidly maturing, the fundamental challenge is no longer technical, but with management and hesitancy at the C-level to adopt new software tools. This will be a necessity as the industry continues to advance its digitalization and face new issues in data latency, storage, and management – a set of challenges many fear the industry is not prepared for.
- The hydrogen revolution will take time and look nothing like the rise of Li-ion batteries. With an expected tipping point for hydrogen adoption post-2040 in an optimistic forecast, the hydrogen economy will rely heavily on government and industry to push the innovation envelope. Unlike the rise of Li-ion batteries, which move from small-scale consumer electronics to stationary storage, hydrogen will first need to be commercialized in the industrial setting with a global standard for storage and transport before seeing other applications.
Lux Research Research Director Arij van Berkel taking part in the panel session at the Institute of Energy Economics, Japan (IEEJ) SIEW Thinktank Roundtable on November 1, 2018 during Singapore International Energy Week 2018. (Photo by SIEW.)
- Singapore’s transition to an open electricity market presents an array of opportunities for creative and innovative retail solutions. On the fourth day of SIEW, Singapore officially opened its electricity market. Although it does little to impact the generation aspect in the short term, we saw numerous retailers offering unique solutions to consumers by packaging electricity with other markets, such as mobile phone services, food and beverage, and retail.
- Utilities are scrambling to differentiate themselves by adopting new innovations. Though utilities adopting new technologies is not unique to Asia, SP Group’s presence at SIEW was well noted. Losing its control on the retail market in Singapore drastically changes its way of doing business, but it is quickly innovating by expanding electric vehicle charging infrastructure, with plans for over 1,000 charging stations by 2020, and launched its very own global renewable energy certificate blockchain platform.
Lux Research Senior Analyst Chris Robinson presenting at the Energy Research Institute at Nanyang Technological University (ERI@N) SIEW Thinktank Roundtable on November 2, 2018. (Photo by SIEW)
- Southeast Asia will likely be the global innovation hub for Mobility-as-a-Service (MaaS). Our American colleagues quickly saw how advanced Southeast Asia’s Grab platform was compared to Uber and Lyft – taking full advantage of all of its online-to-offline (O2O) capabilities during the week. But more importantly, the potential integration of all transportation methods – bus, taxi, and subway – along with integrated ticketing via MobilityX has them all wanting to come back.
- From credit score to carbon credit score, significant changes need to be made for carbon emissions reduction to be taken more seriously. Until our carbon footprint is put out front and center, it remains a pipe dream to believe that the general population would care for reducing emissions. While dystopian and reminiscent of a social credit score, there were discussions of an individual carbon credit score that could be implemented and potentially impact future energy-related purchase decisions.
- Carbon emissions reduction was especially absent throughout the entire week. Aside from a short five-minute anecdote, it was surprising to see the lack of attention on carbon pricing and carbon emissions reduction, especially with Singapore implementing its first carbon tax this year. With the tax being just $5/MT, conversations with attendees showed a consensus of lack of concern about the penalty.
Lux Research Analyst Runeel Daliah and Senior Research Associate Chloe Holzinger answering Q&As at the Singapore Breakfast Briefing “Decarbonizing Energy: Capture, Convert, Capitalize” on November 2, 2018. (Photo by Lux Research.)
Asia has a unique role in the global energy transition. With energy demand continuing to rise, governments must invest in new energy geeration assets and distribution infrastructure to power more than 60% of the world’s population. At the same time, technology developers continue to innovate and offer new hardware, software, and business models for the energy sector. Lastly, the critical step is making sure both can integrate into the existing energy system without sacrificing economic growth and development for the region. It is a challenging but exciting time for everyone.
For more information, please visit Lux Research’s Owning the Energy Transition program overview.